The US is increasing pressure on other countries in connection with talks on a tax on digital services.
The US sales representative announced that he is investigating the situation in Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the UK, which have introduced or plan to introduce new taxes on the digital giants. This issue has already provoked disagreements between the US and France, and ultimately this could mean higher trade tariffs for these countries.
“A warning shot from USTR to signal seriousness and urgency, and to put more pressure on the OECD process to go quickly and in the US direction,” David Livingston, a senior analyst at Eurasia Group, told CNBC.
France was the first major economy to legislate a tax on digital services, but after the US threats to introduce additional tariffs on French exporters, Paris decided to defer tax until 2021.
Meanwhile, the Organization for Economic Cooperation and Development (OECD) is working on a plan that will bring together the US, Franc, and other countries on the taxation of digital companies.
The OECD is due to submit a plan by the end of 2020. According to France, if international talks fail, companies will still have to pay tax.
At the beginning of the year, the US made it clear that it would support some aspects of the digital tax if the scheme is voluntary, and not mandatory for US companies. The idea was criticized by French officials, as American firms represent the largest technology companies in the world.